Britannia Withdraws Mortgage Deals for First-time Buyers

Despite the fact that first-time buyers constitute a large part of UK borrowers, lenders do not try to provide them with new mortgage products. Rather, lenders choose to withdraw mortgage products, which proved to be accessible to first-time buyers earlier.
Recently, one of the largest British lenders “Britannia (it merged with Co-operative Bank earlier this year)“ pulled out its mortgage deals for borrowers with 10% deposit. In the past months, Britannia held approximately 10% of the market share, offering first-time buyers various mortgage options.
Now, after Britannia's move, first-time buyers are left only with a handful of mortgage options that are still available for borrowers with small deposits.
Interestingly, the cost of borrowing wholesale money, which UK lenders rely on to fund their mortgages, has declined significantly in the past months. In spite of this, lenders fail to decrease the cost of mortgages for first-time buyers and mortgage experts are concerned that limited competition in this sector of lending might result in increased cost of already expensive mortgage deals for borrowers with small deposits.
rnCurrently, the deals that are available for borrowers with 10% deposits are offered at 6.63% (on average). This interest rate compares to an average of 5.08% offered for borrowers with 40% deposits.
Let us remind that UK largest lenders, such as Abbey and Lloyds, did introduce a number of cheaper mortgage deals earlier this week, but they are only available for borrowers with a minimum deposit of 40%. Northern Rock also passed a 0.3% cut on mortgage deals for borrowers with 15% deposit. Woolwich decreased the cost of its popular tracker deal by almost 0.5% and offers it for borrowers with 30% deposit.
The vast majority of UK mortgage brokers welcomed the moves of the above-mentioned lenders and criticised Britannia's initiative.